Cabinet to consider NHAI restructuring soon

September 13, 2006

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NEW DELHI, SEPT 13: In a bid to bring in more private investment in the National Highways Development Project (NHDP), the National Highways Authority of India (NHAI) is seeking a complete overhaul of its administrative set up.

NHAI has already sent a corporate restructuring note to the committee on infrastructure stating that it wants greater decision-making autonomy, in order to expedite all highways projects.

Officiating that, chairman and member (finance) of NHAI Satyanarayana Dash said, “With greater private partnership in highway projects and emphasis on the build operate transfer (BOT) model for all projects from NHDP phase II onwards, the role of NHAI has changed. Issues regarding autonomy have come up, which we are trying to address.”

As part of the restructuring, all projects would be cleared by the committee of secretaries, headed by the department of economic affairs secretary. This would ensure faster approval for highway projects. At present, all projects need Cabinet clearance

A major aspect of the restructuring would be the introduction of a new model concession agreement. A model state support agreement (MSSA) is also being finalised, in consultation with the states

The recast would also comprise constitution of a contract and arbitration cell with NHAI. The cell would monitor the progress of all arbitration and litigation cases that NHAI is involved in.

To increase private investment in highway projects, NHAI would set up a special public private partnership cell, with one board member exclusively for it. Increasing the number of board of directors to 12, from the current 10 would also be part of the revamp. For this, the NHAI Act will have to be amended.

The proposals, Dash said, would soon go to the Cabinet for approval.

He said, “The two agreements (MCA and MSSA) will greatly aid the NHAI in getting more private investment for highways as well as expediting all highway projects.”

The model state support agreement aims to get the cooperation of the states in constructing highways through the BOT-toll model, Dash said. According to the pact, the state would not build a competing road parallel to the specified highway. This would ensure the constructing company does not face a loss in toll collections.

The state governments will also ensure that there are no law and order problems for the contractor.